Jaguar Land Rover is to supply up to 20,000 of its new electric I-Pace cars to Waymo, a subsidiary of Google owner Alphabet,to be converted into self-driving vehicles for its ride-hailing service.

The tie-up, worth up to £1.3bn and announced at the New York motor show, is a further mark of Waymo’s ambition in the race with Uber and others to develop a driverless ride-hailing service – as well as a huge boost for Britain’s biggest car manufacturer as it takes it first steps into electric vehicles.

Jaguar will deliver vehicles for Waymo’s ride-hailing service from 2020. Waymo says the 20,000 I-Pace models will provide up to 1m rides a day.

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Although the I-Pace will be produced in Graz, Austria, JLR stressed that it is a British designed and engineered vehicle, from its research and development facility in the West Midlands.

JLR, owned by Indian company Tata, did not put a price on the deal, but an I-Pace, launched less than a month ago, retails at about £63,000 in the UK.

The manufacturer said it would be “a long-term strategic partnership” to develop the world’s first premium self-driving electric vehicle. Testing of the Jaguar car, equipped with Waymo’s self-driving technology, will start in Arizona later this year.

The expansion of the service comes despite fresh fears raised over the safety of self-driving cars, after an autonomous Uber car killed a pedestrian in Arizona last week – the first such casualty.

Uber’s testing of vehicles in Arizona has been suspended after the incident. The victim, a 49-year-old woman wheeling a bicycle, appeared not to be detected by the vehicle’s sensors. The Volvo was operating autonomously with a back-up driver in the front seat when it struck the pedestrian.

Nvidia, which supplies chips for Uber’s self-driving cars, and Toyota have also suspended testing of autonomous vehicles on US public roads following the accident.

The suspensions leave Waymo as the only company with a fleet of fully self-driving cars – and with no one in the front seat – on public roads in the US, and on course to launch the first robotic taxi service, where members can hail cars via Waymo’s app, by the end of the year.

In the UK, JLR has been involved in a range of government-backed trials involving connected and autonomous vehicles, last week demonstrating how emergency braking warning systems could improve safety.

Waymo has been building up a fleet of self-driving vehicles in partnership with Fiat Chrysler since 2015. Last month it said it would buy thousands more of the Chrysler Pacifica minivans, on top of 600 it has already converted, to form the basis for a ride-hailing service that Waymo plans to launch in Arizona later this year.

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JLR’s tie-up with Waymo is another in a series by car manufacturers with new technology firms, following Ford partnering with Lyft and Uber with Volvo.

The auto industry is making substantial investments in autonomous, connected and electric cars, having been heavily committed to diesel and highly fuel-consuming vehicles.

Ralf Speth, the JLR chief executive, said: “With the Jaguar I-Pace we have a world-beating car that’s captured the imagination of customers around the world. Our passion for further advancing smart mobility needs expert long-term partners.

“In joining forces with Waymo we are pioneering to push the boundaries of technology. Together we will deliver the self-driving Waymo Jaguar I-Pace with the grace, space and eco-pace that customers expect.”

John Krafcik, the chief executive of Waymo, said: “While we’ve been focused at Waymo on building the world’s most experienced driver, the team at Jaguar Land Rover has developed an all-new battery-electric platform that looks to set a new standard in safety, design and capability.”